On February 17, 2015, the Ohio Supreme Court issued an opinion in State ex rel. Morrison v. Beck Energy Corp., Slip Opinion No. 2015-Ohio-485, concluding that municipalities “may not discriminate against, unfairly impede or obstruct” oil and gas activities and operations. R.C. Chapter 1509.02 grants to the state government the “sole and exclusive authority to regulate the permitting, location and spacing of oil and gas wells and production operations within the state.” The Court explains that R.C. 723.01 and 4513.34 reserves certain regulatory powers to the municipalities. Specifically, local governments are able to “control public highways, streets, avenues, alleys, sidewalks, public grounds, bridges, aqueducts and viaducts” and “grant permits to operate certain heavy vehicles on highways within their jurisdiction.” However, R.C. 1509.02 prohibits municipalities from discriminating against, unfairly impeding or obstructing oil and gas activities and operations.

Beck Energy Corporation was granted a state permit to drill a new well pursuant to R.C. Chapter 1509. Munroe Falls filed a complaint shortly after Beck Energy started drilling, asserting that Beck Energy was violating the Munroe Falls Codified Ordinances, and sought injunctive relief in the Summit County Court of Common Pleas. Munroe Falls Codified Ordinances required Beck Energy to:

Obtain a conditional zoning certificate,

Pay a fee of $800 and deposit $2,000 for a performance bond at the time of filing,

Hold a public hearing at least three weeks prior to drilling, and

Provide notice of such hearing to all property owners and residents within 1000 feet of the well head.

Anyone found violating these ordinances is guilty of a first degree misdemeanor and shall be imprisoned for a period not to exceed six months, or fined not more than $1000.00 or both. Additionally, each day of a violation constitutes a separate offense.

The Court concluded that the Munroe Falls Ordinances are preempted by the state statute because:

(1) The ordinances are an exercise of police power, rather than of local self-government,

(2) The statute is considered a general law since it is applied uniformly throughout the state, and

(3) The ordinances conflict with the statute regarding the licensure requirements for drilling for oil and gas.

The Court emphasized that this decision is limited to the five municipal ordinances at issue in this case. However, the concurring opinion, written by Justice Terrence O’Donnell, leaves open the question as to whether the “General Assembly intended to wholly supplant all local zoning ordinances limiting land uses to certain zoning districts without regulating the details of oil and gas drilling expressly addressed by R.C. Chapter 1509.”

Amanda L. Fitzhugh Porter is an associate in the Energy Practice Group in Leech Tishman’s Pittsburgh office. If you would like more information on this subject, please contact Amanda at (412) 261-1600 oraporter@leechtishman.com. Learn more about Leech Tishman’s Energy Practice Group here.